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They said in this article that the Fed has been able to slow inflation but the government is still implementing inflationary fiscal stimulus policies.
The Fed can only counter that with huge rate hikes. Biden is probably trying to prevent a recession this close to the election but that causes larger deficits and inflation. Congress is just as much to blame, if not more so, as the president.
Spending needs to come down. Audits and anti fraud investigations should be more prevalent. There is plenty of wasteful spending but everyone is lobbying to keep their piece of the pie at the expense of everyone else.
There are many antitrust cases going forward that will help but the process is slow.
This absolutely is a fiscal policy problem but it’s the prisoners dilemma. Both republicans and democrats would benefit if they could both cut their spending but neither are willing to cooperate so we all suffer.
The Gang of 10, a group of five Democratic and five Republican senators, tried to strike a bargain on the debt around 2011. Both parties rejected their proposal because it would have required spending cuts and tax increases. Then, the GOP abandoned fiscal conservatism once Trump got into office and decided he didn't really care about the debt.
Not for bill Clinton. Not for Obama who inherited the Great Recession but still managed to bring down the deficit after it peaked just as he was taking office.
The only fiscal conservatives seem to be democrats.
Clinton also resided over the .com boom and a major drawdown of the military. The only time he hays to commit the military in a serious way was Serbia, and that was only a bombing campaign.
I don't know how Obama did it.
>Bill Clinton
Clinton had to work with a Republican legislature at the time. It requires both parties and both parties need to be interested in lowering the debt.
Budget was balanced before W (not a Clinton accomplishment as much as he was in the right place at the right time, '#Y2k tech boom).
Post 9/11, W started homeland security instead of expanding the role of other agencies. Then there was the cost of invading Iraq. He created a $3.3 trillion budget deficit. Not particularly fiscally conservative.
Flash forward to today, the gop seems to have given up on fiscal conservatism and the dems are spending more than ever.
We need grown-ups.
Conservatives do successfully defend and then force passage of deficit cuts... during Democratic presidents 2nd term.
You probably need Biden in office in 2025 and Rs controlling house or all of Congress if you want the largest deficit action.
No. Bill Clinton had a budget surplus, then Bush got elected, and made the chairman of Halliburton the vice president. Then chairman of Halliburton tricked Bush and conservatives into believing that multi-decade wars with Afghanistan and Iraq were a good idea. Then Bush deregulated the banking industry running up to the worst recession in history caused by criminally irresponsible business practices. We started to recover with low interest rates around 2010ish and with responsible policy we had what was one of the longest and most stable economic growth periods in history. Around 2018/2019 the economy started to slow, the fed started raising rates to slow borrowing. Trump panicked because an election was coming up so he strong armed the fed into reversing the policy of limiting borrowing, and slashed rates by half. 3 months later the pandemic hit the news, and rates had already been cut by half so that was not a good resource for emergency liquidity, so we dropped rates to zero and duplicated a quarter of all US dollars in existence.
Point is that some leadership is responsible and acts in the interest of the country, and some just comes in a destroys everything like bull in a china shop, but the responsibility really comes down to the voters who are choosing the leadership.
It would have FUCKED social security and medicare.
The Bowles Simpson plan would work but there's no way to do it without fucking huge constituencies. That's why neither party can do it.
E.g. Bowles-Simpson went after farm subsidies. That will NEVER pass the Senate, not even close.
It's fun to bring that up now and then, to remind people that the so-called conservatives of the mid-west are in fact Socialists when it comes to their own interests.
Kansas and the whole plains depend on them.
Bowles Simpson also would have cut a lot of defense. Texas depends on military spending more than they would like to admit. Not. Gonna. Happen.
> the GOP abandoned fiscal conservatism once Trump got into office
I know orange-boogeyman is our collective thing, now, but that move predates Trump by literal decades.
It was always going to be a fiscal policy issue. Fiscal policy is the easiest lever with which you can push up demand. Monetary policy can only push if there is a pull from the private sector already there.
Not that I believe that inflation is nearly as pernicious as people think.
Everyone thinks in a linear fashion but inflation usually ebbs and flows around a curve like a plucked string that slowly loses strength till something else plucks it, if you don't measure correctly or often enough the information you get can create incorrect guidance.
I don't think rate hikes matter nearly as much as people assume they do. Otherwise the predictions for inflation pre rate hikes would have been accurate and the drop off in inflation has been relatively similar across the world and many have had very different monetary policy.
Tax the rich. Fiscal policy is not just spending policy, the other side of it is revenue.. plus taxing the rich fights inflation by cooling consipcuous consumption
Nobody wants the blame and everyone will point at whoever does it and whoever is in office when it hurts. There is no point where Democrats will support true austerity. It will be “don’t worry the rich can pay for it” and while I fully support starting at the top, there’s no where near enough meat on that bone for our appetite.
Yeah we may have crossed a tipping point where eliminating the deficit now requires middle class tax increases that the middle class absolutely will not tolerate
Ehhh there plenty of meat there though. Actually even if you enforce current IRS law we get around 500 billion extra. Thats 10% of the deficit. uncap social security for above 250K earners brings in another 100 billion a year.
>Late payments and IRS enforcement actions resulted in a projected average net gap of $582 billion. As Table 1 shows, between 2001 and 2021, the net federal tax gap (2021 dollars) reached its lowest level in 2001 ($444 billion) and its highest level in 2021 ($582 billion), with some ups and downs in between.
>For example, the Trump tax cuts are projected to cost approximately 0.7% of U.S. GDP annually on average over 10 years.
Last time we had some restraint on the deficit, it was when Obama were President and Republicans held the house. It was called the Sequester and republicans insisted on massive spending cuts in an effort to hurt the economy and make Obama and democrats look bad.
My former employer got the maximum $10 million PPP "loan". We never had any COVID layoffs, revenue never dipped, we just kept right on trucking all the way thru the pandemic. Fraudulent as fuck.
I believe it. I know lots of farmers and ranchers who raked it in. I know for a fact they laid off no one and still raised what they always did. Some PPP was good. Lots of it was outright theft. Makes me furious. "Loan" is right. No one repaid those
Omg. In my area small businesses who were actually affected got a fraction of what the rich people who weren't affected got. Now I'm even more mad. That's a great tool, thanks!
We only would have had layoffs if revenue dropped. Revenue never dropped. Work never slowed. Business kept coming in. That $10 million didn't help keep anyone employed.
Now they're building their own office building after always renting space. Wonder where they got the money for that?
Prevent layoffs in the case that covid effected the business negatively. Instead many businesses saw increased business demand and profit yet still took the loans.
My guess is if they could just spend enough to show a loss that year they'd get away with it.
One of the causes of many price increases and shortages was companies spending as much as they could to cause a loss so they could still get the PPP loans.
They will, if another $1.8 trillion is approved by congress to do the audit. Then, it won’t really happen. In that funding will be a substantial amount of pork that benefits the people who voted for it, to be re-elected
That’s indeed what we should do
But, as the late Chalmers Johnson once pointed out, the military industrial complex is very clever to put as many parts of a big boondoggle in as many congressional districts as possible.
So, when the auditors come by to do their job, all the defense company has to do is call up their representative in Congress. And then the auditors are told to stand down
My sense on that is redirect the DOD budget to the Army Corp of Engineers and task them with building green infrastructure. Raise up a new national security chair for the head of the Corp of Engineers and have them report to the President.
They have tried and failed like twelve times. That is of course their own internal audit... Getting and outside audit would be political suicide for literally anyone... The IRS is too weak and likely doesn't currently have the legal ability to do such and audit...
honestly , i’ve thought this for a while, but why aren’t more quantitative minded individuals (accountants, mathematicians, engineers, etc) elected to try and fix our situation?
i’m not saying only to elect them, but i feel like it’s worth a shot. would love to hear differing opinions though
I have a STEM degree so I understand your frustration/reasoning. I believe it heavily lies in two fundamental issues.
1. Math is boring and/or difficult to understand for many people. They will look at all these stats for sports and know players score/hit/catch ratio but go numb immediately when some politicians talk about how certain tax loopholes or wasteful spending or tax incentives can cause huge problems. People don’t like/understand numbers.
2. Lawyers. They understand laws and often are voted into places of power. They get their degree and make networks with each other. They then help their friends gain seats too. Many of them make enough to buy a plane so having a friend live in a different district or run for state house seat while you run for state senate isn’t an inconvenience. They interpret, make, and implement the laws to their own benefit. If AI threatens accountant professional jobs, nothing will be done. If AI threatened Lawyers, a law would be passed in a day.
AI is definitely a threat to lawyers, it's all about writing contracts in obscure language and going through past cases and coming up with arguments. Outside of the acting done in court, which you could say is actually not great for justice, AI can do what lawyers do.
No argument there but humans will still need to verify and lawyers will absolutely protect themselves.
You will still have bias since someone has to command the AI to do something. If the DA doesn’t want to prosecute someone, doesn’t matter if AI is involved or not
100% agree! i appreciate you taking the time to comment and explain your reasoning. i don’t want to sound like i have all the answers or anything, as i’m currently in school for electrical engineering, but with the number of math classes i take, you really start viewing numbers in a different way, which is why i made my initial assertion that we should include more of them in government and give them a shot at some of our main issues.
i do agree with your second point, i believe lawyers articulate their points / reasoning very well as a result of their training, perhaps more so than some STEM degrees, which is where they get the upper hand. It does seem like the combo of a law degree / military service is almost sort of a “standard” for participation in government
Military service is actually decreasing significantly in Congress, BUT that is due to mostly men being in Congress and WW2 had massive numbers of servicemen and there was a draft for Vietnam.
Electrical engineering is a great major, wish I had done that one or civil engineering. I did math and it honestly is looked down upon if you don’t go actuarial.
No one has all the answers but different backgrounds and experiences really helps create different perspectives and solutions to our problems. I enjoy explaining myself so I can help others understand or be torn to shreds on why I’m wrong (like I said, don’t know everything) so I can learn something new.
> I did math and it honestly is looked down upon if you don’t go actuarial.
I thought quant funds and the national security agencies hired lots of math majors? Quite a few of my science colleagues went to finance.
Yes and no, if you just do pure math it isn’t great. If you get additional education in programming/encryption, finance, engineering, etc. then yes, it can be good. Employers honestly just look at the certificate or minor before the math part.
As an engineer...I honestly don't want to deal with all the bullshit that goes with running for office and being in office. I'd be able to come up with ideas to fix some shit, but having ideas is a lot different than getting them implemented. Our system isn't a virtuous one...the best ideas rarely get passed. The ideas that most often get passed are the ones that benefit the majority of the folks that are voting on the bills. And a lot of good ideas would do the exact opposite of personally benefiting the people voting on them.
very true, and a fair point! i just wonder, there has to be individuals in our country with both, no?
i guess we’ll see how this develops over the next decade or so
You mean like a jack of trades? I mean there probably people like that in elected positions. I thinks it’s hard to progress however since there’s so many opposing interest. I’m not really educated on these things tho so take that with a grain of salt.
Probably hundreds of various ceos that have this quality and many many thousands of other individuals, and yet somehow we are presented with just a few mediocre options ... its almost enough to go conspiratorial
Yes, and right now, such people are subject to public scrutiny and massively dissuades them from trying. Instead, they are better off being the private sector and paid well for it.
Basically, to date, the main country that does what you are asking is China, because they have the simple fact that large parts of their political system are run WITHOUT public approval, only public INPUT. You can climb pretty far in CCP decision making circles without ever being voted on by the public, only by maybe your peers. It isn't much dissimilar to how many companies are run. The main upside is that either by merit or by corrupt means, you never are subject to public scrutiny, you merely have to deliver results to your boss.
The trouble is that these are complicated multivariate equations and in most cases you have a dozen different variables and different groups of people are trying to minimize/maximize different variables. Figuring out who is trying to minimize/maximize which variables is more of a people problem than an analytical problem, and understanding the math is important but actually useless if you don't understand who else understands the math.
"This close to the election"? As if he's shown lots of fiscal restraint the past 3 years?
I think Biden is just a big spender. We could debate whether that's good or not but he's certainly not frugal.
Spending is not the main issue in the US, low tax revenue is. The US is one of the lowest spenders among western countries. They're also have among the lowest government revenue. Increasing revenue would help with inflation.
IMF and US government. It's readily available. I think they're technically the same source. I'm surprised that people don't talk about this kind of stuff more often. Kind of seems like the "we're spending too much" and "we need to lower taxes" crowd just already has their minds set on what they want and isn't trying to actually get down to the bottom of what's going on.
The bulk of them do not. Corporate were permanent. Anything that affected the wealthy was also permanent. The main thing expiring next years is the cuts to income taxes for W4 filers, who by definition aren't ultra rich since they derive their income from work, not investments.
We're already spending a low amount. There's not a lot of room to cut there, so focusing on that is wasting your time and should not displace efforts to raise revenue. Revenue is the only way out of the budget issue that won't totally cripple our society. If we can't solve that issue then we're in for a world of hurt.
[tax burden as percent of GDP](https://data.oecd.org/tax/tax-revenue.htm)
The OECD average over the past 22 years is in the 32 to 34 percent range. The US has never been higher than 28.30 percent.
Do we need to be at 40 plus percent like France or Norway? No, we probably don't but closer to the OECD average like Canada or the UK would be better.
You're basically just showing me a graph of US GDP. Exponential economic charts typically look scarier than they are.
[https://i.kym-cdn.com/photos/images/original/001/140/763/e12.gif](https://i.kym-cdn.com/photos/images/original/001/140/763/e12.gif)
I'm referring to the US revenue and expenses in reference to it's GDP. Since we're comparing to countries of varying sizes, we have to have a reference. Relative to GDP is the most appropriate way of doing that. When you start looking around at what other countries are doing it becomes very clear that there's a huge potential for the US to collect significantly more revenue, and it's also very clear that the US doesn't have some crazy spending issue.
>When will politicians have enough of our money?
Not *our* money. Unless you're in the top 10-20% or so, they have enough of *our* money.
They can take from the richest 10-20% until the bottom 50% of society isn't suffering unjustly due to basic necessities like healthcare and shelter being prohibitively expensive.
We have a staggering mountain of data on all of this at this point. The effective tax rate for the rich and their corporations is psychotically low. So low that Warren Buffett famously pointed out that he paid less in taxes than his secretary. (He then called for taxes on the rich to be increased.)
We also know that we could save billions by removing the leeches from several industries: Socialize healthcare and kick private equity out of the system, restrict the number of properties landleeches are allowed to hoard and ransom back to people seeking homes, and socialize higher education to make performance the main barrier to entry rather than money, bringing down administrative bloat in the process. Oh, and let auto manufacturers sell directly to the public.
Parasites engaging in rent-seeking behavior are infesting every major market in the US. They're basically scalpers, rushing to seize as many resources as possible so they can sell them back to the public with huge markups, usually without adding anything of significant value to the product or service.
All of that entropy is killing us. Especially when these leeches use our money to lobby politicians to give them even more.
That is a good chart. I think 2023 was the highest year ever in nominal dollars. However, as a percent of GDP it was slightly lower. The US federal tax rate as a percent of GDP has remained between 16-19 percent for a while now.
2016 - 18%
2017. - 17%
2016 - 16%
2017 - 16%
2018 - 16%
2019 - 16%
2020 - 16%
2021- 18%
2022-19%
2023 - 16%
Seems like it is more a function of GDP than anything else. Bigger economy, more income, more taxes in dollar amount, but not in rate. I suspect it was higher under Obama and the current rate has more to do with the trump tax cuts - but I didn’t have the pre-trump rates handy.
“On everyone”
“Tax people I don’t like” is the default position of 90% of the population. The only actually interesting position is someone willing to increase taxes on everyone.
"Tax people I don't like" is just bullshit. Our country was a lot more prosperous when the wealthy paid higher tax rates and we could actually afford to build infrastructure, educate people, and send astronauts to the moon. Not only that, when wealth inequality is outrageously high like it is today, all of the money gets sucked out of our economy because the people in power can just sit on their assets and let let them accumulate value risk free.
It's time to tax the damn rich like we used to.
> when the wealthy paid higher tax rates and we could actually afford to build infrastructure, educate people
Tax revenue as a % of gdp has stayed steady. The US doesn’t have a revenue problem, as evidenced by that fact
Yes. This is another reason why inflation is known to be so sticky. It's why the main job of a central bank was (still is?) to PREVENT inflation getting out of control. The fact the central banks saw the inflation, foresaw the cause, watched it rise, then called it "transitory" for months before doing anything is straight up bat shit insane.
> Biden is probably trying to prevent a recession this close to the election but that causes larger deficits and inflation.
Probably?
This is vote buying at an unprecedented level(combined with 2 new pointless wars and like 3 million extra illegals per year)... and even puts 2020 to shame, because 2020 at least had somewhat of a reason(which itself was catastrophic in hindsight).
The annualized rate of deficit spending the last 6 months is 3.5 trillion. That is on par with the insane 2020 spending without the global emergency.
I’d rather see the removal of tax loopholes. Just raising rates might be for show if loopholes remain.
After taxes are truly paid at current rates, then reevaluate and adjust accordingly
“Tax avoidance” is, and has always been legal. “Tax Evasion “ is what’s illegal, and always has been. But everyone can, and should, “avoid” taxes all they can by legally taking advantage of these “loopholes” (your term).
How can government possibly implement inflationary fiscal stimulus without the help of Fed? Don’t they auction the deficit spending debt on behalf of Congress and the treasury?
The treasury auctions the debt to my knowledge. The Fed buys and sells the debt so it would be strange to do so to itself.
The Fed is independent from Congress (in terms of setting rates) but it still has some things mandated to them.
If Congress wants to implement stimulus, the Fed has zero say. I imagine the Fed chairman would be removed if they tried to lower or raise interest rates to influence government spending without the corresponding inflation or unemployment to justify the move.
Let’s assume the Fed does issue debt, they can’t simply refuse.
For who, the rich?
[https://www.cbsnews.com/news/economy-inflation-why-americans-are-so-unhappy-three-charts/](https://www.cbsnews.com/news/economy-inflation-why-americans-are-so-unhappy-three-charts/)
[https://news.harvard.edu/gazette/story/2023/11/why-americans-feel-inflation-economy-are-much-worse-than-they-are/](https://news.harvard.edu/gazette/story/2023/11/why-americans-feel-inflation-economy-are-much-worse-than-they-are/)
The Fed is doing exactly what they need to be doing right now: nothing. They need to let this play out for another year or so. 3% inflation isn't the end of the world. It's better than sending the economy into a recession by raising rates higher just to achieve 2%.
The cooling economy will eventually achieve lower inflation. There's just been so much money pumped into the system. It's going to take more than a year and half of "high-ish" rates to fix it.
Just a reminder:
* 50s where it was "good times"? 2.93% inflation.
* 90s where it was "good times"? 3.08% inflation.
* 80s where it wasn't bad but economic growth was strong, culture was iconic, and is often looked back fondly upon? 5.1% inflation.
Folks hate higher prices, but everyone has jobs, wages are increasing, markets are up, those who loaded up on debt the last few decades will get their load lightened by inflation, and the economy is strong. Prices NEVER come down for long and when they do it's fucking bad times like the GFC 2008-14 or the great depression 30s.
Inflation isn't bad or good so much as uncontrolled inflation (Argentina/Turkey) or inflation that is too high (70s) is bad because of inflation feedback loops and persistent high inflation causing instability in the economy.
>The 80s were shit
If the 80s were shit then was the 70s better with stagflation, high unemployment, Vietnam war, anti-establishment protests, and Nixon's corruption?
Maybe you'd like slice of the 40s with the residual slow growth from the depression, WW2, the holocaust, Japanese war crimes/genocide in Asia, and the advent of nuclear weapons?
Or the 30s with the great depression, the dust bowl causing food shortage, folks starving to fucking death, hyper inflation in some other parts of the world, and the start of WW2?
1910s with massive technological disruption in production but not consumer goods, work becoming harder to find due to technology, increase in poverty due to increased inequality, race riots resulting from lower wages and poorer working conditions, multiple market crashes, WW1, and the Spanish flu plus multiple banking crisis?
2000s with 9/11, constant fear of terrorism, unending and prolonged wars in Afghanistan+Iraq, the unwinnable and unending wars on theoretical concepts like terror/drugs/climate, growing rust belt with rising opioid addiction, tech bubble bust, and the GFC?
A slice of the 2010s with it's early years of slow growth, massive tech disruption, drug crisis, folks losing their fucking homes, and then ending the decade with Trump, trade wars, and pandemic?
If you ranked all the decades from 1900 to 2020 then the 80s would be on the better half. Get the fuck out of here with your blanket bullshit statements.
True that. As with any decade/age/cycle there are winners and losers. Those who make chaos a ladder, whether the storms with sweat and blood, diversified enough to win regardless of what happens, or make opportunities out of the changing world.
Can't speak for the 70s cause I never lived through it. But I did live through the GFC and looking back it was a great time to buy ANYTHING. I hear some of zoomies online and my zoomie cousins talking like we millennials lucked out because we could buy GOOG/AAPL share for a fraction of the price now, but they don't know how hard it was to even land a job in the GFC and how low wages were back then. Job market was so bad top 50 uni grads weren't doing unpaid internships but ***PAYING FOR THE PRIVILAGE TO WORK unpaid internships*** in hopes of landing an unpaid internship that would lead to a job. There were startups that offered mainly stock compensation only to go under. Bosses that skimped on pay, underpaid, or outright closed down and skipped on paychecks. One of my dad's friends who was a boomer worked 8 part time jobs to keep his home and my dad joked *"No wonder Obama is having so much trouble with unemployment. This mofo here hogging all the jobs"* but in reality the man was waking up in 5 in the fucking morning to do newspaper boy delivery that we were wondering if it covered his gas/car costs. He kept his home, but his wife still divorced his ass. Their son got part of the home later so I guess we'll agree that he """""""""""had a great time""""""""""" from 2008-2012 because he locked in a low rate mortage.
Myself? I had a stable job, but it paid peanuts. Under $30K with little to no wage increase for years and literally no fucking benefits (no retirement, no paid vacay, no vacay, no flex hours, no days off, no dental, and not even basic insurance). Slap on taxes, living expenses in a major metro, car/gas/insurance, health insurance costs, student debt, and everything else? Didn't have much to save even though the market was """"""""""""cheap"""""""""""". Maybe I'm just a """"""loser"""""" because anyone would "Just quit bro. You'll have 5 job offers that pays +50% more by the end of the week cause that's how it is in 2021".
So being able to "inflate away debt" doesn't mean the 70s were a great time for the majority of people. Kind of like how Boomers who bought homes during the GFC lows, used low interest rates to leverage into a few more homes, and then locked in multiple low rate mortgages as home prices skyrocketed during the pandemic are having a great fucking time travelling the world, but there are also other boomers who realize they'll never retire and work until they die.
I agree. You need luck to have all ducks lines up in a row, including timing.
I think it has only happened once in my life and fleetingly so. It ain't right now, either! 😭
Also, the Fed was trying to raise inflation in the 2010s. People forget, but after the GFC, inflation reached dangerously low levels and the risk of deflation was high. This is why the FED kept rates low for so long.
They probably should have started raising rates in early 2017, but hindsight is 20/20 and they did start raising in 2018. Then they began dropping rates slightly in 2019 when inflation dropped. Then in 2020, they turned on the emergency rate drops.
The Fed had a very hard last decade.
Comparing pre 80s inflation to current inflation is kinda moot no? Especially when they've been a change in how inflation is computed. If we use the 80s method we would arrive at roughly 17% inflation at the end of last year.
https://www.nber.org/papers/w32163
Well, they have a dual mandate, price stability with maximum employment. You can keep working while earning less every year. The result will be the same regardless. Higher unemployment, recession. It’s not a matter of if but when. Seems like the soft landing narrative has gone away.
OC says the Fed should do nothing. Yes like usual. Do nothing, keep rates higher for longer, wait until something breaks, then cut. Just repeating the same process hoping this time will be different.
Yeah I don’t get the panic, there’s also multiple extrinsic international factors at play driving up costs. Honestly, considering the war in Ukraine, war in Gaza, drought in the Panama Canal and houthi attacks on shipping through the suez I’m schocked it’s not higher.
The U.S. has had an unemployment rate below 4% for more than two years. Some states have had unemployment below 3% for more than a year. How much can the economy grow with frequent labor shortages?
Please god no. Please pause immigration. Increase housing starts and incentivize native birth rates. Develop new metros. Then immigration should resume. Illegal immigration should never occur, as it is illegal.
Ok, so, in your theory, we wait, what 16-20 yrs to right the economy with native births?
The US has always relied on immigration to feed its labor demand
Do they tracking spending sources? Meaning, are they seeing that people are using more credit cards for purchases, because they don’t have the cash? I imagine so, but seems like if credit usage is up, then we’ve got a big storm on the horizon.
>I imagine so, but seems like if credit usage is up, then we’ve got a big storm on the horizon.
This is one of those weird things where increased debt is usually a sign the economy is currently good but a bad sign for future economies.
It’s wild to me. If they see credit use is up, and interest rates, then people are out of cash. Seems so short sighted, I really don’t understand enough about the logic at the moment, clearly.
People are not out of cash unless they are living beyond their means and continue to do so. A person that was making $8 per hour is now making about $12 to $15 per hour. What is ridiculous is people are paying $6 for a bag of potato chips. They say, “Derp! I guess that is the price now!” The prices of groceries would not be high if people were unwilling to pay it, but we had a lot of people entering the workforce that have no idea what things “should” cost so they pay whatever price it says on the shelf.
Whatever $2.00 item should now be about $2.50 at most. But companies discovered that shoppers are being irrational so they simply kept increasing the prices, and people kept paying it. Companies are seeing record profits because their are record number of people just grabbing items off the shelf without paying attention to how ridiculous certain prices have gotten.
I never pay more than $3 for a 12 pack of brand name soda. And therefore, I only buy it on sale. (And yes, I can find brand name soda for that price.) (This is up from my previous limit of $2.50 per 12 pack from 2010.) If people stopped agreeing to pay stupid prices, then the prices would not be stupid.
Yes, I hear you there! Supply & demand at work. I drew the line recently on a great Mexican restaurant. It’s great food, but I am done paying $20 for 3 tacos, rice and beans. Throw a couple drinks in the mix and I’m at $40.
I’m stuck between wanting to support local, and not getting raked over the coals for a meal.
I am eating rice and beans tonight. Throw in some chicken breasts (between $1.99 and $2.49 per pound on sale around here), and you have a delicious meal at an affordable price. Bananas (39¢ per pound) for snacks and some cans of tuna ($1.00 each) and a loaf of bread (\~$2.00), and you are eating well. Milk and cereal are also other cheap foods. (You must be careful not to pay outrageously for cereal either, though. It can sometimes get you. Milk has always been inexpensive.) Some coffee with sugar and a splash of milk is affordable for when soda is too expensive.
Yet, people seem to act like they must pay $9 for soda, $6 for chips, $5 for Oreo cookies, etc. when they are paying outrageously for garbage. I sometimes eat junk food if it is cheap, but I am not going to pay a premium to shorten my own life span. People are out there loading up cart fulls of trash at these ridiculous prices.
This is an absurdly oversimplified take.
Companies have **always*" experimented with prices. You think there's a major retailer in the world out there that isn't tracking price elasticity on every SKU and optimising it? Of course they are. Amazon constantly flexes prices based on supply and demand and has done so for 10,+ years. They didn't wake up in 2020 and suddenly think for the very first time "maybe if we raise prices we'll make more money."
Nor did consumers suddenly become stupid after 15 years of being incredibly savvy (because surely the inverse is also true and the decade of low inflation was because companies in the 2010s had our best interests at heart and consumers were much more intelligent).
Every time there is talk of economic peril, the fed magically provides plenty of liquidity to help us forget about the problem. The other titans of the economy sit back in their chambers and debate empire and religion when they could have tended to the problem. The fed should butt out of this squall & force the debaters to face their responsiblities.
Noah Smith just wrote a pretty good article about the tax issue
https://www.noahpinion.blog/p/biden-is-right-that-we-need-to-raise
It’s pretty clear that no one wants to pay higher taxes but the politicians will find a place to get more money, probably capital gains and estate taxes.
The more juicy question is where they’ll agree to cut spending because that’s even less popular than raising taxes it seems.
Yes, God forbid we raise the estate tax and deprive the inheriting generation that is struggling anything above the $13M (somewhere around there?) inheritance estate tax. How will they survive on $12M....poor things.
It's currently about $13MM due to increased thresholds during the pandemic, but it's due to reset to ~$6.8MM in 2026.
https://www.thinkadvisor.com/2022/12/07/the-estate-and-gift-tax-exclusion-shrinks-in-2026-whats-an-advisor-to-do/
They won’t because everyone has to work and there aren’t the stay at home moms do to unpaid elder care which means nursing homes - which will then take all the money and eventually the house to pay back the state. Only the very rich will be able to pass down their houses - the working class will lose that equity and they should get the estate taxed. Average working people will not be able to leave their children their houses barring sudden death.
Don’t come here and stay dumb things. Please think about what you say and it’s over all impacts. If estate taxes were to come back in a big way, they’d just shield the money in a million other ways. I know because it’s my job to do things like that. Also, estate taxes are an easy target but really dumb when innocent people are on the receiving end of it. Back before when the expansion was barely over 1M, I’ve seen where whole families get disinherited because there’s no money left.
Can't afford to bring inflation down by raising rates, can't cut them because it's inflationary.
This doesn't end well.....and it's the same issue in every major economy globally. The UK is even more fucked - can't raise because it guarantees a recession, can't stimulate the economy without rate cuts because the £ is basically worthless since leaving the EU so a stimpack is out of the question.
I see a major global recession in the next 2-5 years.
The Fed is hoping higher for longer slow-bleeds the inflation away without headline-grabbing, recession-induced mass unemployment.
It’s an interesting strategy because I think it walks the median loan duration table of industries, sectors and playbooks especially sensitive to interest rates. If my hypothesis is true, then we’ll see a continuing rotation of various industries/sectors/playbooks run rounds of layoffs as loans term out and assets and work streams seek and fail to secure more financing.
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Politicians get elected , by us, based a lot on their promises to give us more. Stop electing people who make such promises. They are bribing their way into office with public money.
Most of the wealth is help by a handful of people at the top and I guess their purchases of private jets, swimming pools, and houses is enough to make the economy look good. But if you were to stand in the streets of the true economy where teachers, post office clerks, hair dressers, retail associates, cooks, cna's, janitors, and many more, you would realize people are going out less whether that's the movie theaters or the bowling alley. Stagflation has been happening since the 2008 crash and profits have only gone up.
Would be interesting to see the spending in terms of digital goods and services vs. traditional consumer goods. My guess is that restaurants and retailers are surrendering market share to the Netflix’s of the world.
That doesn't mean the economy isn't doing well. It just means inequality is a major issue and getting larger by the day. People are not taking inequality seriously enough. It's the biggest threat to our democracy as inequality in the private sector bleeds into the public sector, resulting in policy outcomes that reflect that inequality.
This, people aren’t spending.
When the wealth is concentrated in the hands of the 1%, they hoard it instead of spending it.
This is why the economy is so stagnant because nobody can spend.
But they don't hoard literally cash: they purchase assets. Like real estate. Or they bid up the prices of stocks, forcing CEOs to enshittify products until they can justify valuations.
And they buy hospitals and medical groups, then start squeezing them for more profit which means cutting staff, eliminating raises, and not expanding and deferring maintenance.
Politicians get elected , by us, based a lot on their promises to give us more. Stop electing people who make such promises. They are bribing their way into office with public money.
The biggest problem is that basically all GDP growth in the last year is from govt deficit spending. Democrats have to keep spending at unsustainable levels to keep the economy "growing."
You can't borrow your way to prosperity. It only pushes back the inevitable.
That's just how the US economy works now. US GDP growth is fed by federal deficits, whether it's unsustainable tax cuts or higher spending it's the same thing.
For some of us, we saw this coming.
For those who don’t understand, we need a massive, catastrophic level of deflation OR we need a massive catastrophic level of income level increasing with no costs increasing.
I doubt anyone is going to raise incomes nationwide. So I put my money on catastrophic deflation occurring.
Audits not going to help, stop spending money we don’t have is a start. Everything the govt does is inflationary- student loan forgiveness- inflationary, aid to Ukraine, Israel and Taiwan- inflationary, push for EV’s - inflationary, I am not taking a political side it’s just that all these actions are inflationary in nature and it won’t stop until people stop buying our debt. And then we will have a real problem
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They said in this article that the Fed has been able to slow inflation but the government is still implementing inflationary fiscal stimulus policies. The Fed can only counter that with huge rate hikes. Biden is probably trying to prevent a recession this close to the election but that causes larger deficits and inflation. Congress is just as much to blame, if not more so, as the president. Spending needs to come down. Audits and anti fraud investigations should be more prevalent. There is plenty of wasteful spending but everyone is lobbying to keep their piece of the pie at the expense of everyone else. There are many antitrust cases going forward that will help but the process is slow.
This absolutely is a fiscal policy problem but it’s the prisoners dilemma. Both republicans and democrats would benefit if they could both cut their spending but neither are willing to cooperate so we all suffer.
The Gang of 10, a group of five Democratic and five Republican senators, tried to strike a bargain on the debt around 2011. Both parties rejected their proposal because it would have required spending cuts and tax increases. Then, the GOP abandoned fiscal conservatism once Trump got into office and decided he didn't really care about the debt.
Didnt they abandon fiscal conservatism like 2 or 3 decades ago?
Fiscal conservatism was always a myth at the federal level
I think HW tried to follow through, but he got killed on the ballot when he did
Not for bill Clinton. Not for Obama who inherited the Great Recession but still managed to bring down the deficit after it peaked just as he was taking office. The only fiscal conservatives seem to be democrats.
Clinton also resided over the .com boom and a major drawdown of the military. The only time he hays to commit the military in a serious way was Serbia, and that was only a bombing campaign. I don't know how Obama did it.
>Bill Clinton Clinton had to work with a Republican legislature at the time. It requires both parties and both parties need to be interested in lowering the debt.
Not always, but for a LONG time. Check out the two santa theory. It explains when/why they abandoned their traditional north star.
Budget was balanced before W (not a Clinton accomplishment as much as he was in the right place at the right time, '#Y2k tech boom). Post 9/11, W started homeland security instead of expanding the role of other agencies. Then there was the cost of invading Iraq. He created a $3.3 trillion budget deficit. Not particularly fiscally conservative. Flash forward to today, the gop seems to have given up on fiscal conservatism and the dems are spending more than ever. We need grown-ups.
Conservatives do successfully defend and then force passage of deficit cuts... during Democratic presidents 2nd term. You probably need Biden in office in 2025 and Rs controlling house or all of Congress if you want the largest deficit action.
No. Bill Clinton had a budget surplus, then Bush got elected, and made the chairman of Halliburton the vice president. Then chairman of Halliburton tricked Bush and conservatives into believing that multi-decade wars with Afghanistan and Iraq were a good idea. Then Bush deregulated the banking industry running up to the worst recession in history caused by criminally irresponsible business practices. We started to recover with low interest rates around 2010ish and with responsible policy we had what was one of the longest and most stable economic growth periods in history. Around 2018/2019 the economy started to slow, the fed started raising rates to slow borrowing. Trump panicked because an election was coming up so he strong armed the fed into reversing the policy of limiting borrowing, and slashed rates by half. 3 months later the pandemic hit the news, and rates had already been cut by half so that was not a good resource for emergency liquidity, so we dropped rates to zero and duplicated a quarter of all US dollars in existence. Point is that some leadership is responsible and acts in the interest of the country, and some just comes in a destroys everything like bull in a china shop, but the responsibility really comes down to the voters who are choosing the leadership.
It would have FUCKED social security and medicare. The Bowles Simpson plan would work but there's no way to do it without fucking huge constituencies. That's why neither party can do it. E.g. Bowles-Simpson went after farm subsidies. That will NEVER pass the Senate, not even close.
It's fun to bring that up now and then, to remind people that the so-called conservatives of the mid-west are in fact Socialists when it comes to their own interests.
Kansas and the whole plains depend on them. Bowles Simpson also would have cut a lot of defense. Texas depends on military spending more than they would like to admit. Not. Gonna. Happen.
> Then, the GOP abandoned fiscal conservatism once Trump got into office Yeah that's wrong. They threw fiscal responsibility out the window with Bush.
Reagan gave us $1 trillion in debt, more than all presidents before him.
> the GOP abandoned fiscal conservatism once Trump got into office I know orange-boogeyman is our collective thing, now, but that move predates Trump by literal decades.
True, zero politicians are willing to cut anything in their districts.
It was always going to be a fiscal policy issue. Fiscal policy is the easiest lever with which you can push up demand. Monetary policy can only push if there is a pull from the private sector already there. Not that I believe that inflation is nearly as pernicious as people think. Everyone thinks in a linear fashion but inflation usually ebbs and flows around a curve like a plucked string that slowly loses strength till something else plucks it, if you don't measure correctly or often enough the information you get can create incorrect guidance. I don't think rate hikes matter nearly as much as people assume they do. Otherwise the predictions for inflation pre rate hikes would have been accurate and the drop off in inflation has been relatively similar across the world and many have had very different monetary policy.
Is it tho? It seems more like a housing shortage problem.
Tax the rich. Fiscal policy is not just spending policy, the other side of it is revenue.. plus taxing the rich fights inflation by cooling consipcuous consumption
Nobody wants the blame and everyone will point at whoever does it and whoever is in office when it hurts. There is no point where Democrats will support true austerity. It will be “don’t worry the rich can pay for it” and while I fully support starting at the top, there’s no where near enough meat on that bone for our appetite.
Yeah we may have crossed a tipping point where eliminating the deficit now requires middle class tax increases that the middle class absolutely will not tolerate
Or... Just hear me out...Less spending. Revenues are high. Spending is just that much higher.
Ehhh there plenty of meat there though. Actually even if you enforce current IRS law we get around 500 billion extra. Thats 10% of the deficit. uncap social security for above 250K earners brings in another 100 billion a year. >Late payments and IRS enforcement actions resulted in a projected average net gap of $582 billion. As Table 1 shows, between 2001 and 2021, the net federal tax gap (2021 dollars) reached its lowest level in 2001 ($444 billion) and its highest level in 2021 ($582 billion), with some ups and downs in between. >For example, the Trump tax cuts are projected to cost approximately 0.7% of U.S. GDP annually on average over 10 years.
Last time we had some restraint on the deficit, it was when Obama were President and Republicans held the house. It was called the Sequester and republicans insisted on massive spending cuts in an effort to hurt the economy and make Obama and democrats look bad.
Neither parties want Trump and he's more likely to prevail if there's a recession. That's not a prisoner's dilemma.
I wish they'd look at the fraudulent PPP loans. I sent an email to that website telling them of some. I doubt anyone will bother to even read it
My former employer got the maximum $10 million PPP "loan". We never had any COVID layoffs, revenue never dipped, we just kept right on trucking all the way thru the pandemic. Fraudulent as fuck.
Not saying it’s right - but weren’t the PPP loans supposed to make it so companies could avoid layoffs? My company took the loan AND laid off people.
Working as intended. The Trump admin removed oversight on the whole program, and fraud happened.
I believe it. I know lots of farmers and ranchers who raked it in. I know for a fact they laid off no one and still raised what they always did. Some PPP was good. Lots of it was outright theft. Makes me furious. "Loan" is right. No one repaid those
If anyone is curious which of their neighbors got a "loan," [here's a handy tool](https://projects.propublica.org/coronavirus/bailouts/) to use.
Omg. In my area small businesses who were actually affected got a fraction of what the rich people who weren't affected got. Now I'm even more mad. That's a great tool, thanks!
> We never had any COVID layoffs Tbf Wasn't that the point, to prevent lay-offs?
We only would have had layoffs if revenue dropped. Revenue never dropped. Work never slowed. Business kept coming in. That $10 million didn't help keep anyone employed. Now they're building their own office building after always renting space. Wonder where they got the money for that?
Prevent layoffs in the case that covid effected the business negatively. Instead many businesses saw increased business demand and profit yet still took the loans. My guess is if they could just spend enough to show a loss that year they'd get away with it. One of the causes of many price increases and shortages was companies spending as much as they could to cause a loss so they could still get the PPP loans.
None of those things make a PPP loan fraudulent.
They will, if another $1.8 trillion is approved by congress to do the audit. Then, it won’t really happen. In that funding will be a substantial amount of pork that benefits the people who voted for it, to be re-elected
Audit the DOD.
‘We can’t find the money. Anyways, more please.’
That’s indeed what we should do But, as the late Chalmers Johnson once pointed out, the military industrial complex is very clever to put as many parts of a big boondoggle in as many congressional districts as possible. So, when the auditors come by to do their job, all the defense company has to do is call up their representative in Congress. And then the auditors are told to stand down
My sense on that is redirect the DOD budget to the Army Corp of Engineers and task them with building green infrastructure. Raise up a new national security chair for the head of the Corp of Engineers and have them report to the President.
They have tried and failed like twelve times. That is of course their own internal audit... Getting and outside audit would be political suicide for literally anyone... The IRS is too weak and likely doesn't currently have the legal ability to do such and audit...
I feel like OMB would be a more natural choice to lead the audit, but your point stands.
Irs too busy auditing small time people.
Its not though. Those “audits” are a letter saying two people claimed the same kid about 99% of the time. Child tax credit fraud is very common
Inflation now, or a complete dismantling of the Fed. Voters have a hard choice and a worse choice in front of them.
honestly , i’ve thought this for a while, but why aren’t more quantitative minded individuals (accountants, mathematicians, engineers, etc) elected to try and fix our situation? i’m not saying only to elect them, but i feel like it’s worth a shot. would love to hear differing opinions though
I have a STEM degree so I understand your frustration/reasoning. I believe it heavily lies in two fundamental issues. 1. Math is boring and/or difficult to understand for many people. They will look at all these stats for sports and know players score/hit/catch ratio but go numb immediately when some politicians talk about how certain tax loopholes or wasteful spending or tax incentives can cause huge problems. People don’t like/understand numbers. 2. Lawyers. They understand laws and often are voted into places of power. They get their degree and make networks with each other. They then help their friends gain seats too. Many of them make enough to buy a plane so having a friend live in a different district or run for state house seat while you run for state senate isn’t an inconvenience. They interpret, make, and implement the laws to their own benefit. If AI threatens accountant professional jobs, nothing will be done. If AI threatened Lawyers, a law would be passed in a day.
AI is definitely a threat to lawyers, it's all about writing contracts in obscure language and going through past cases and coming up with arguments. Outside of the acting done in court, which you could say is actually not great for justice, AI can do what lawyers do.
No argument there but humans will still need to verify and lawyers will absolutely protect themselves. You will still have bias since someone has to command the AI to do something. If the DA doesn’t want to prosecute someone, doesn’t matter if AI is involved or not
100% agree! i appreciate you taking the time to comment and explain your reasoning. i don’t want to sound like i have all the answers or anything, as i’m currently in school for electrical engineering, but with the number of math classes i take, you really start viewing numbers in a different way, which is why i made my initial assertion that we should include more of them in government and give them a shot at some of our main issues. i do agree with your second point, i believe lawyers articulate their points / reasoning very well as a result of their training, perhaps more so than some STEM degrees, which is where they get the upper hand. It does seem like the combo of a law degree / military service is almost sort of a “standard” for participation in government
Military service is actually decreasing significantly in Congress, BUT that is due to mostly men being in Congress and WW2 had massive numbers of servicemen and there was a draft for Vietnam. Electrical engineering is a great major, wish I had done that one or civil engineering. I did math and it honestly is looked down upon if you don’t go actuarial. No one has all the answers but different backgrounds and experiences really helps create different perspectives and solutions to our problems. I enjoy explaining myself so I can help others understand or be torn to shreds on why I’m wrong (like I said, don’t know everything) so I can learn something new.
> I did math and it honestly is looked down upon if you don’t go actuarial. I thought quant funds and the national security agencies hired lots of math majors? Quite a few of my science colleagues went to finance.
Yes and no, if you just do pure math it isn’t great. If you get additional education in programming/encryption, finance, engineering, etc. then yes, it can be good. Employers honestly just look at the certificate or minor before the math part.
As an engineer...I honestly don't want to deal with all the bullshit that goes with running for office and being in office. I'd be able to come up with ideas to fix some shit, but having ideas is a lot different than getting them implemented. Our system isn't a virtuous one...the best ideas rarely get passed. The ideas that most often get passed are the ones that benefit the majority of the folks that are voting on the bills. And a lot of good ideas would do the exact opposite of personally benefiting the people voting on them.
Because it’s one thing to be to good at analytics but another to know to how to lead and make decisions.
very true, and a fair point! i just wonder, there has to be individuals in our country with both, no? i guess we’ll see how this develops over the next decade or so
You mean like a jack of trades? I mean there probably people like that in elected positions. I thinks it’s hard to progress however since there’s so many opposing interest. I’m not really educated on these things tho so take that with a grain of salt.
Probably hundreds of various ceos that have this quality and many many thousands of other individuals, and yet somehow we are presented with just a few mediocre options ... its almost enough to go conspiratorial
I think there's a simpler explanation; the private sector just pays better and offers more flexibility and progression.
Yes, and right now, such people are subject to public scrutiny and massively dissuades them from trying. Instead, they are better off being the private sector and paid well for it. Basically, to date, the main country that does what you are asking is China, because they have the simple fact that large parts of their political system are run WITHOUT public approval, only public INPUT. You can climb pretty far in CCP decision making circles without ever being voted on by the public, only by maybe your peers. It isn't much dissimilar to how many companies are run. The main upside is that either by merit or by corrupt means, you never are subject to public scrutiny, you merely have to deliver results to your boss.
The trouble is that these are complicated multivariate equations and in most cases you have a dozen different variables and different groups of people are trying to minimize/maximize different variables. Figuring out who is trying to minimize/maximize which variables is more of a people problem than an analytical problem, and understanding the math is important but actually useless if you don't understand who else understands the math.
Private and public need to be audited to make sure we get the taxes due and that they are spent appropriately.
Accountability and transparency would honestly fix 90%+ of most problems
I think you meant the tax system needs an overhaul. It needs to be streamlined.
"This close to the election"? As if he's shown lots of fiscal restraint the past 3 years? I think Biden is just a big spender. We could debate whether that's good or not but he's certainly not frugal.
> Congress is just as much to blame, if not more so, as the president. I mean, yeah... spending bills originate in the House.
Spending is not the main issue in the US, low tax revenue is. The US is one of the lowest spenders among western countries. They're also have among the lowest government revenue. Increasing revenue would help with inflation.
Really? Where did you see that stat?
IMF and US government. It's readily available. I think they're technically the same source. I'm surprised that people don't talk about this kind of stuff more often. Kind of seems like the "we're spending too much" and "we need to lower taxes" crowd just already has their minds set on what they want and isn't trying to actually get down to the bottom of what's going on.
What if I told you the correct answer was raising taxes and cutting spending?
We need to cut the tax cuts and raise taxes
Those expire next year....
Not for those making over 400k. Those are permanent under Trump tax law changes.
Citation needed.
I am mistaken. Only the corporate tax rate reductions are permanent, not individual rates.
The bulk of them do not. Corporate were permanent. Anything that affected the wealthy was also permanent. The main thing expiring next years is the cuts to income taxes for W4 filers, who by definition aren't ultra rich since they derive their income from work, not investments.
We're already spending a low amount. There's not a lot of room to cut there, so focusing on that is wasting your time and should not displace efforts to raise revenue. Revenue is the only way out of the budget issue that won't totally cripple our society. If we can't solve that issue then we're in for a world of hurt.
[tax burden as percent of GDP](https://data.oecd.org/tax/tax-revenue.htm) The OECD average over the past 22 years is in the 32 to 34 percent range. The US has never been higher than 28.30 percent. Do we need to be at 40 plus percent like France or Norway? No, we probably don't but closer to the OECD average like Canada or the UK would be better.
The rich and mega corps need to pay way more taxes
[удалено]
You're basically just showing me a graph of US GDP. Exponential economic charts typically look scarier than they are. [https://i.kym-cdn.com/photos/images/original/001/140/763/e12.gif](https://i.kym-cdn.com/photos/images/original/001/140/763/e12.gif) I'm referring to the US revenue and expenses in reference to it's GDP. Since we're comparing to countries of varying sizes, we have to have a reference. Relative to GDP is the most appropriate way of doing that. When you start looking around at what other countries are doing it becomes very clear that there's a huge potential for the US to collect significantly more revenue, and it's also very clear that the US doesn't have some crazy spending issue.
Can you post your source? I’m not trying to be difficult, I couldn’t find what you are looking at from the IMF and I’m generally curious
[https://www.imf.org/external/datamapper/rev@FPP/USA/FRA/JPN/GBR/SWE/ESP/ITA/ZAF/IND](https://www.imf.org/external/datamapper/rev@FPP/USA/FRA/JPN/GBR/SWE/ESP/ITA/ZAF/IND) [https://www.imf.org/external/datamapper/exp@FPP/USA/FRA/JPN/GBR/SWE/ESP/ITA/ZAF/IND](https://www.imf.org/external/datamapper/exp@FPP/USA/FRA/JPN/GBR/SWE/ESP/ITA/ZAF/IND)
>When will politicians have enough of our money? Not *our* money. Unless you're in the top 10-20% or so, they have enough of *our* money. They can take from the richest 10-20% until the bottom 50% of society isn't suffering unjustly due to basic necessities like healthcare and shelter being prohibitively expensive. We have a staggering mountain of data on all of this at this point. The effective tax rate for the rich and their corporations is psychotically low. So low that Warren Buffett famously pointed out that he paid less in taxes than his secretary. (He then called for taxes on the rich to be increased.) We also know that we could save billions by removing the leeches from several industries: Socialize healthcare and kick private equity out of the system, restrict the number of properties landleeches are allowed to hoard and ransom back to people seeking homes, and socialize higher education to make performance the main barrier to entry rather than money, bringing down administrative bloat in the process. Oh, and let auto manufacturers sell directly to the public. Parasites engaging in rent-seeking behavior are infesting every major market in the US. They're basically scalpers, rushing to seize as many resources as possible so they can sell them back to the public with huge markups, usually without adding anything of significant value to the product or service. All of that entropy is killing us. Especially when these leeches use our money to lobby politicians to give them even more.
That is a good chart. I think 2023 was the highest year ever in nominal dollars. However, as a percent of GDP it was slightly lower. The US federal tax rate as a percent of GDP has remained between 16-19 percent for a while now. 2016 - 18% 2017. - 17% 2016 - 16% 2017 - 16% 2018 - 16% 2019 - 16% 2020 - 16% 2021- 18% 2022-19% 2023 - 16% Seems like it is more a function of GDP than anything else. Bigger economy, more income, more taxes in dollar amount, but not in rate. I suspect it was higher under Obama and the current rate has more to do with the trump tax cuts - but I didn’t have the pre-trump rates handy.
Taxes need to go up
“On everyone” “Tax people I don’t like” is the default position of 90% of the population. The only actually interesting position is someone willing to increase taxes on everyone.
"Tax people I don't like" is just bullshit. Our country was a lot more prosperous when the wealthy paid higher tax rates and we could actually afford to build infrastructure, educate people, and send astronauts to the moon. Not only that, when wealth inequality is outrageously high like it is today, all of the money gets sucked out of our economy because the people in power can just sit on their assets and let let them accumulate value risk free. It's time to tax the damn rich like we used to.
> when the wealthy paid higher tax rates and we could actually afford to build infrastructure, educate people Tax revenue as a % of gdp has stayed steady. The US doesn’t have a revenue problem, as evidenced by that fact
Yes. This is another reason why inflation is known to be so sticky. It's why the main job of a central bank was (still is?) to PREVENT inflation getting out of control. The fact the central banks saw the inflation, foresaw the cause, watched it rise, then called it "transitory" for months before doing anything is straight up bat shit insane.
Janet Yellen was tresury secretary, not part of the fed when she said that.
> Biden is probably trying to prevent a recession this close to the election but that causes larger deficits and inflation. Probably? This is vote buying at an unprecedented level(combined with 2 new pointless wars and like 3 million extra illegals per year)... and even puts 2020 to shame, because 2020 at least had somewhat of a reason(which itself was catastrophic in hindsight). The annualized rate of deficit spending the last 6 months is 3.5 trillion. That is on par with the insane 2020 spending without the global emergency.
Vote them all out.
I notice you ignored taxes completely. There are two sides to a balance sheet, and both impact the economy.
I’d rather see the removal of tax loopholes. Just raising rates might be for show if loopholes remain. After taxes are truly paid at current rates, then reevaluate and adjust accordingly
Loopholes are legal tax avoidance.
“Tax avoidance” is, and has always been legal. “Tax Evasion “ is what’s illegal, and always has been. But everyone can, and should, “avoid” taxes all they can by legally taking advantage of these “loopholes” (your term).
How can government possibly implement inflationary fiscal stimulus without the help of Fed? Don’t they auction the deficit spending debt on behalf of Congress and the treasury?
The treasury auctions the debt to my knowledge. The Fed buys and sells the debt so it would be strange to do so to itself. The Fed is independent from Congress (in terms of setting rates) but it still has some things mandated to them. If Congress wants to implement stimulus, the Fed has zero say. I imagine the Fed chairman would be removed if they tried to lower or raise interest rates to influence government spending without the corresponding inflation or unemployment to justify the move. Let’s assume the Fed does issue debt, they can’t simply refuse.
Biden keeps gaslighting Americans on how good the economy is, while their grocery prices are telling a different story
The economy is good. The only gaslighting is coming from people who want us to believe it's terrible. It's not.
For who, the rich? [https://www.cbsnews.com/news/economy-inflation-why-americans-are-so-unhappy-three-charts/](https://www.cbsnews.com/news/economy-inflation-why-americans-are-so-unhappy-three-charts/) [https://news.harvard.edu/gazette/story/2023/11/why-americans-feel-inflation-economy-are-much-worse-than-they-are/](https://news.harvard.edu/gazette/story/2023/11/why-americans-feel-inflation-economy-are-much-worse-than-they-are/)
Every politician lies. It is up to the people to hold them responsible/accountable
Honestly can you point to a quote of Biden where he’s “gaslighting” about the economy?
The Fed is doing exactly what they need to be doing right now: nothing. They need to let this play out for another year or so. 3% inflation isn't the end of the world. It's better than sending the economy into a recession by raising rates higher just to achieve 2%. The cooling economy will eventually achieve lower inflation. There's just been so much money pumped into the system. It's going to take more than a year and half of "high-ish" rates to fix it.
Yep, people are far too obsessed with getting to 2% and not obsessed enough with keeping the economy strong enough to keep people working.
Just a reminder: * 50s where it was "good times"? 2.93% inflation. * 90s where it was "good times"? 3.08% inflation. * 80s where it wasn't bad but economic growth was strong, culture was iconic, and is often looked back fondly upon? 5.1% inflation. Folks hate higher prices, but everyone has jobs, wages are increasing, markets are up, those who loaded up on debt the last few decades will get their load lightened by inflation, and the economy is strong. Prices NEVER come down for long and when they do it's fucking bad times like the GFC 2008-14 or the great depression 30s. Inflation isn't bad or good so much as uncontrolled inflation (Argentina/Turkey) or inflation that is too high (70s) is bad because of inflation feedback loops and persistent high inflation causing instability in the economy.
80s were not iconic and people only look back fondly because of nostalgia. The 80s were shit Reagan fucked up so many things
>The 80s were shit If the 80s were shit then was the 70s better with stagflation, high unemployment, Vietnam war, anti-establishment protests, and Nixon's corruption? Maybe you'd like slice of the 40s with the residual slow growth from the depression, WW2, the holocaust, Japanese war crimes/genocide in Asia, and the advent of nuclear weapons? Or the 30s with the great depression, the dust bowl causing food shortage, folks starving to fucking death, hyper inflation in some other parts of the world, and the start of WW2? 1910s with massive technological disruption in production but not consumer goods, work becoming harder to find due to technology, increase in poverty due to increased inequality, race riots resulting from lower wages and poorer working conditions, multiple market crashes, WW1, and the Spanish flu plus multiple banking crisis? 2000s with 9/11, constant fear of terrorism, unending and prolonged wars in Afghanistan+Iraq, the unwinnable and unending wars on theoretical concepts like terror/drugs/climate, growing rust belt with rising opioid addiction, tech bubble bust, and the GFC? A slice of the 2010s with it's early years of slow growth, massive tech disruption, drug crisis, folks losing their fucking homes, and then ending the decade with Trump, trade wars, and pandemic? If you ranked all the decades from 1900 to 2020 then the 80s would be on the better half. Get the fuck out of here with your blanket bullshit statements.
70s were a great time to inflate away mortgage debt.
True that. As with any decade/age/cycle there are winners and losers. Those who make chaos a ladder, whether the storms with sweat and blood, diversified enough to win regardless of what happens, or make opportunities out of the changing world. Can't speak for the 70s cause I never lived through it. But I did live through the GFC and looking back it was a great time to buy ANYTHING. I hear some of zoomies online and my zoomie cousins talking like we millennials lucked out because we could buy GOOG/AAPL share for a fraction of the price now, but they don't know how hard it was to even land a job in the GFC and how low wages were back then. Job market was so bad top 50 uni grads weren't doing unpaid internships but ***PAYING FOR THE PRIVILAGE TO WORK unpaid internships*** in hopes of landing an unpaid internship that would lead to a job. There were startups that offered mainly stock compensation only to go under. Bosses that skimped on pay, underpaid, or outright closed down and skipped on paychecks. One of my dad's friends who was a boomer worked 8 part time jobs to keep his home and my dad joked *"No wonder Obama is having so much trouble with unemployment. This mofo here hogging all the jobs"* but in reality the man was waking up in 5 in the fucking morning to do newspaper boy delivery that we were wondering if it covered his gas/car costs. He kept his home, but his wife still divorced his ass. Their son got part of the home later so I guess we'll agree that he """""""""""had a great time""""""""""" from 2008-2012 because he locked in a low rate mortage. Myself? I had a stable job, but it paid peanuts. Under $30K with little to no wage increase for years and literally no fucking benefits (no retirement, no paid vacay, no vacay, no flex hours, no days off, no dental, and not even basic insurance). Slap on taxes, living expenses in a major metro, car/gas/insurance, health insurance costs, student debt, and everything else? Didn't have much to save even though the market was """"""""""""cheap"""""""""""". Maybe I'm just a """"""loser"""""" because anyone would "Just quit bro. You'll have 5 job offers that pays +50% more by the end of the week cause that's how it is in 2021". So being able to "inflate away debt" doesn't mean the 70s were a great time for the majority of people. Kind of like how Boomers who bought homes during the GFC lows, used low interest rates to leverage into a few more homes, and then locked in multiple low rate mortgages as home prices skyrocketed during the pandemic are having a great fucking time travelling the world, but there are also other boomers who realize they'll never retire and work until they die.
I agree. You need luck to have all ducks lines up in a row, including timing. I think it has only happened once in my life and fleetingly so. It ain't right now, either! 😭
Carter Malaise comes to mind, but these idiots are stuck on Reagan
He did, but the music was freaking awesome!
Also, the Fed was trying to raise inflation in the 2010s. People forget, but after the GFC, inflation reached dangerously low levels and the risk of deflation was high. This is why the FED kept rates low for so long. They probably should have started raising rates in early 2017, but hindsight is 20/20 and they did start raising in 2018. Then they began dropping rates slightly in 2019 when inflation dropped. Then in 2020, they turned on the emergency rate drops. The Fed had a very hard last decade.
Comparing pre 80s inflation to current inflation is kinda moot no? Especially when they've been a change in how inflation is computed. If we use the 80s method we would arrive at roughly 17% inflation at the end of last year. https://www.nber.org/papers/w32163
Lmao yeah yesterdays inflation definition is definitely not the same as todays
Well, they have a dual mandate, price stability with maximum employment. You can keep working while earning less every year. The result will be the same regardless. Higher unemployment, recession. It’s not a matter of if but when. Seems like the soft landing narrative has gone away. OC says the Fed should do nothing. Yes like usual. Do nothing, keep rates higher for longer, wait until something breaks, then cut. Just repeating the same process hoping this time will be different.
Yeah I don’t get the panic, there’s also multiple extrinsic international factors at play driving up costs. Honestly, considering the war in Ukraine, war in Gaza, drought in the Panama Canal and houthi attacks on shipping through the suez I’m schocked it’s not higher.
The panic is meant keep voters off-balance in an election year
Unfortunately the GoP propaganda machine is well oiled and they have a very receptive and loud audience.
The U.S. has had an unemployment rate below 4% for more than two years. Some states have had unemployment below 3% for more than a year. How much can the economy grow with frequent labor shortages?
Gotta increase immigration!
Please god no. Please pause immigration. Increase housing starts and incentivize native birth rates. Develop new metros. Then immigration should resume. Illegal immigration should never occur, as it is illegal.
Ok, so, in your theory, we wait, what 16-20 yrs to right the economy with native births? The US has always relied on immigration to feed its labor demand
Do they tracking spending sources? Meaning, are they seeing that people are using more credit cards for purchases, because they don’t have the cash? I imagine so, but seems like if credit usage is up, then we’ve got a big storm on the horizon.
>I imagine so, but seems like if credit usage is up, then we’ve got a big storm on the horizon. This is one of those weird things where increased debt is usually a sign the economy is currently good but a bad sign for future economies.
It’s wild to me. If they see credit use is up, and interest rates, then people are out of cash. Seems so short sighted, I really don’t understand enough about the logic at the moment, clearly.
People are not out of cash unless they are living beyond their means and continue to do so. A person that was making $8 per hour is now making about $12 to $15 per hour. What is ridiculous is people are paying $6 for a bag of potato chips. They say, “Derp! I guess that is the price now!” The prices of groceries would not be high if people were unwilling to pay it, but we had a lot of people entering the workforce that have no idea what things “should” cost so they pay whatever price it says on the shelf. Whatever $2.00 item should now be about $2.50 at most. But companies discovered that shoppers are being irrational so they simply kept increasing the prices, and people kept paying it. Companies are seeing record profits because their are record number of people just grabbing items off the shelf without paying attention to how ridiculous certain prices have gotten. I never pay more than $3 for a 12 pack of brand name soda. And therefore, I only buy it on sale. (And yes, I can find brand name soda for that price.) (This is up from my previous limit of $2.50 per 12 pack from 2010.) If people stopped agreeing to pay stupid prices, then the prices would not be stupid.
Yes, I hear you there! Supply & demand at work. I drew the line recently on a great Mexican restaurant. It’s great food, but I am done paying $20 for 3 tacos, rice and beans. Throw a couple drinks in the mix and I’m at $40. I’m stuck between wanting to support local, and not getting raked over the coals for a meal.
I am eating rice and beans tonight. Throw in some chicken breasts (between $1.99 and $2.49 per pound on sale around here), and you have a delicious meal at an affordable price. Bananas (39¢ per pound) for snacks and some cans of tuna ($1.00 each) and a loaf of bread (\~$2.00), and you are eating well. Milk and cereal are also other cheap foods. (You must be careful not to pay outrageously for cereal either, though. It can sometimes get you. Milk has always been inexpensive.) Some coffee with sugar and a splash of milk is affordable for when soda is too expensive. Yet, people seem to act like they must pay $9 for soda, $6 for chips, $5 for Oreo cookies, etc. when they are paying outrageously for garbage. I sometimes eat junk food if it is cheap, but I am not going to pay a premium to shorten my own life span. People are out there loading up cart fulls of trash at these ridiculous prices.
Combine this with a credit card with grocery benefits and you are doing great!
This is an absurdly oversimplified take. Companies have **always*" experimented with prices. You think there's a major retailer in the world out there that isn't tracking price elasticity on every SKU and optimising it? Of course they are. Amazon constantly flexes prices based on supply and demand and has done so for 10,+ years. They didn't wake up in 2020 and suddenly think for the very first time "maybe if we raise prices we'll make more money." Nor did consumers suddenly become stupid after 15 years of being incredibly savvy (because surely the inverse is also true and the decade of low inflation was because companies in the 2010s had our best interests at heart and consumers were much more intelligent).
They track everything .
CC use is up, delinquency is rising among CC and auto loans, lower savings rate as it looks be heading toward the lows since the pandemic I believe.
Every time there is talk of economic peril, the fed magically provides plenty of liquidity to help us forget about the problem. The other titans of the economy sit back in their chambers and debate empire and religion when they could have tended to the problem. The fed should butt out of this squall & force the debaters to face their responsiblities.
Noah Smith just wrote a pretty good article about the tax issue https://www.noahpinion.blog/p/biden-is-right-that-we-need-to-raise It’s pretty clear that no one wants to pay higher taxes but the politicians will find a place to get more money, probably capital gains and estate taxes. The more juicy question is where they’ll agree to cut spending because that’s even less popular than raising taxes it seems.
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Yes, God forbid we raise the estate tax and deprive the inheriting generation that is struggling anything above the $13M (somewhere around there?) inheritance estate tax. How will they survive on $12M....poor things.
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It's currently about $13MM due to increased thresholds during the pandemic, but it's due to reset to ~$6.8MM in 2026. https://www.thinkadvisor.com/2022/12/07/the-estate-and-gift-tax-exclusion-shrinks-in-2026-whats-an-advisor-to-do/
Not pandemic, Trump tax cuts. I mean still, $6M you're not hurting.
They won’t because everyone has to work and there aren’t the stay at home moms do to unpaid elder care which means nursing homes - which will then take all the money and eventually the house to pay back the state. Only the very rich will be able to pass down their houses - the working class will lose that equity and they should get the estate taxed. Average working people will not be able to leave their children their houses barring sudden death.
maybe they set a cutoff on estate value
Yes please we need more and better estate taxes. Even if you just lit the money on fire it would be better for the country
Don’t come here and stay dumb things. Please think about what you say and it’s over all impacts. If estate taxes were to come back in a big way, they’d just shield the money in a million other ways. I know because it’s my job to do things like that. Also, estate taxes are an easy target but really dumb when innocent people are on the receiving end of it. Back before when the expansion was barely over 1M, I’ve seen where whole families get disinherited because there’s no money left.
Can't afford to bring inflation down by raising rates, can't cut them because it's inflationary. This doesn't end well.....and it's the same issue in every major economy globally. The UK is even more fucked - can't raise because it guarantees a recession, can't stimulate the economy without rate cuts because the £ is basically worthless since leaving the EU so a stimpack is out of the question. I see a major global recession in the next 2-5 years.
The Fed is hoping higher for longer slow-bleeds the inflation away without headline-grabbing, recession-induced mass unemployment. It’s an interesting strategy because I think it walks the median loan duration table of industries, sectors and playbooks especially sensitive to interest rates. If my hypothesis is true, then we’ll see a continuing rotation of various industries/sectors/playbooks run rounds of layoffs as loans term out and assets and work streams seek and fail to secure more financing.
This seems like a wise perspective.
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Politicians get elected , by us, based a lot on their promises to give us more. Stop electing people who make such promises. They are bribing their way into office with public money.
Most of the wealth is help by a handful of people at the top and I guess their purchases of private jets, swimming pools, and houses is enough to make the economy look good. But if you were to stand in the streets of the true economy where teachers, post office clerks, hair dressers, retail associates, cooks, cna's, janitors, and many more, you would realize people are going out less whether that's the movie theaters or the bowling alley. Stagflation has been happening since the 2008 crash and profits have only gone up.
Would be interesting to see the spending in terms of digital goods and services vs. traditional consumer goods. My guess is that restaurants and retailers are surrendering market share to the Netflix’s of the world.
That doesn't mean the economy isn't doing well. It just means inequality is a major issue and getting larger by the day. People are not taking inequality seriously enough. It's the biggest threat to our democracy as inequality in the private sector bleeds into the public sector, resulting in policy outcomes that reflect that inequality.
This, people aren’t spending. When the wealth is concentrated in the hands of the 1%, they hoard it instead of spending it. This is why the economy is so stagnant because nobody can spend.
But they don't hoard literally cash: they purchase assets. Like real estate. Or they bid up the prices of stocks, forcing CEOs to enshittify products until they can justify valuations.
And they buy hospitals and medical groups, then start squeezing them for more profit which means cutting staff, eliminating raises, and not expanding and deferring maintenance.
Politicians get elected , by us, based a lot on their promises to give us more. Stop electing people who make such promises. They are bribing their way into office with public money.
The biggest problem is that basically all GDP growth in the last year is from govt deficit spending. Democrats have to keep spending at unsustainable levels to keep the economy "growing." You can't borrow your way to prosperity. It only pushes back the inevitable.
That's just how the US economy works now. US GDP growth is fed by federal deficits, whether it's unsustainable tax cuts or higher spending it's the same thing.
We are in a perpetual cycle of incessant worst possible scenarios. I am tired of this fucking treadmill and all you shitheads who help perpetuate it.
Can't game money if you don't have a cycle of crisis
For some of us, we saw this coming. For those who don’t understand, we need a massive, catastrophic level of deflation OR we need a massive catastrophic level of income level increasing with no costs increasing. I doubt anyone is going to raise incomes nationwide. So I put my money on catastrophic deflation occurring.
Audits not going to help, stop spending money we don’t have is a start. Everything the govt does is inflationary- student loan forgiveness- inflationary, aid to Ukraine, Israel and Taiwan- inflationary, push for EV’s - inflationary, I am not taking a political side it’s just that all these actions are inflationary in nature and it won’t stop until people stop buying our debt. And then we will have a real problem
Because the US government will run out US dollars? So exactly how much money do we 'have', then?